Joe Hockey joins Insiders

Federal Treasurer Joe Hockey speaks with Insiders from the G20 summit in Brisbane.

BARRIE CASSIDY, PRESENTER: About an hour ago, I caught up with the Treasurer Joe Hockey from the sidelines of the G20.

Treasurer, thanks for your time this morning.

JOE HOCKEY, TREASURER: Great to be with you, Barrie.

BARRIE CASSIDY: What seems to be in prospect now is that leaders will go beyond the commitment to two per cent growth, is that accurate?

JOE HOCKEY: Well, it certainly is the case that two per cent target that we announced in Sydney has been met, but it will go further. Yesterday the Europeans put a 300 billion Euro package on the table to try and stimulate the European economy and that's very encouraging and that wasn't included in our original target of two per cent.

BARRIE CASSIDY: As I understand it, there is commitment to ongoing improvements beyond that?

JOE HOCKEY: Absolutely. We cannot rest. The world needs growth.

Australia needs growth, Barrie, and there are a number of very difficult reforms we have to undertake to get there, but we are only going to get prosperity and jobs as a result of the changes which, for example, Tony Abbott talked about yesterday, on things like higher education reform, Medicare co-payments and so on.

We know they're difficult, but we have to do them if we're going to create jobs.

BARRIE CASSIDY: Is there a guarantee, though, the leaders will do what they say they will do?

JOE HOCKEY: Well, what we have done is we've commissioned the IMF and the World Bank to monitor and report back on the performance of individual countries.

So for the first time ever, we've put a number on the ambition, so it is not words, it's a number.

Secondly, 1,000 initiatives have been provided by the 19 nations around the table that are directly involved.

Thirdly, we are going to have a monitoring program and a public display of the performance of individual countries.

So there's a lot of pressure on individual countries to deliver.

BARRIE CASSIDY: But then they all have their own unique problems. You mentioned Tony Abbott referred to his, getting the budget implemented he said is extremely difficult.

Is there a question mark over whether Australia can deliver?

JOE HOCKEY: Well, of course there is a question mark over any democracy, including, for example, the United States about its commitments on climate change which president Obama talked so much about.

There's always going to be a question about it, but ultimately governments and countries need to be laying down plans to deliver jobs and prosperity and you have to earn it. You have to earn it. What we've got to do is work a way to convince the community, but also to convince our own Parliaments, that what we are doing is actually going to generate prosperity. Because the days of loose monetary policy, the days of big spending governments, they're over, Barrie. They're over in Australia, they're over everywhere. The only way we are going to get growth going right across the world and in Australia is if we have the sort of structural changes which in Australia means reform of higher education, it means actually fixing the welfare system. Those sort of things make a big difference.

Of course, the big one is free trade. That's the huge debate that we've been having and last night the leaders sitting around a table alone had an incredibly productive discussion about how we can free up trade around the world.

BARRIE CASSIDY: But you've referred to Tony Abbott's opening remarks, it's been described in one newspaper as a whinge, Bill Shorten said it was weird. Why was there so much emphasis on domestic politics?

JOE HOCKEY: It was an illustration of the fact that every country is going to face its challenges.

There is always a lot of discussion at these forums about 'we're going to do this or we're going to do that'. But no-one ever talks about how you are going to do it and what challenges you face. One of the things that has come back from all the other countries is that Australia has a refreshing approach. It's an honest approach. We call it fair dinkum in Australia, but it's an honest approach and it actually deals with how we're going to do it and the challenges we all face because, as you know, the British Parliament, the Canadian Parliament, the Australian Parliament and the US Congress, for example, all have these challenges.

Japan has said they have significant challenges. The Korean president told me last night finally they are going to be able to deliver the Free Trade Agreement through their own Parliament in the next few weeks, but it 's been a bit of a battle.

BARRIE CASSIDY: He was just being fair dinkum, was he, when he said that climate change, at a time when leaders seem to be anxious to raise the issue and commit even further, the Prime Minister boasted in fact that he had scaled back? There certainly seems to be a perception of resistance on his part to make this a central issue.

JOE HOCKEY: Well, it was actually - climate change was actually in the first original draft of the communiqué which Australia distributed to the rest of the world. Well before any deal between the United States and China. Obviously well before yesterday's speech from president Obama. So it was always going to be part of the discussion here at the G20.

That's been on the table. There is nothing particularly new about the discussion. It is an important issue but ultimately the only way anyone can pay for all the initiatives you need to deal with climate change is to have money in the bank and governments can only have money if they've got prosperous economies. It comes back to the focus on growth and jobs.

BARRIE CASSIDY: You don't seem particularly impressed anyway by what Barack Obama said. You said there are question marks over what he said on climate change. Question marks over the commitment -

JOE HOCKEY: No, no, I didn't see his speech. I just made the point that Barack Obama has to get any initiative on climate change through a hostile US Congress -

BARRIE CASSIDY: You don't see that's happening?

JOE HOCKEY: That's the challenge every government faces.

I mean that's up to the US, but so far he hasn't had great success. You never know. Hopefully he can do what he wants to do as president, but we all face those challenges, but we've got to do what we believe to be right for the nation, he is doing what he believes to be right of the United States.

BARRIE CASSIDY: What did you make of him telling Australian university students to virtually rise up over the issue?

JOE HOCKEY: I didn't hear his speech, Barrie. I was in meetings with Finance Ministers. We're the ones doing the hard work on the treadmill and the leaders, in the case of the president, he is entitled to give a speech and should give a speech at a university. I didn't hear the full context of his statement.

BARRIE CASSIDY: You might have read what Nicholas Stern told the 'Financial Review' over the weekend, he was responsible for the ground-breaking report on climate change in 2006, and he said that "the relegation of climate change to the margins of G20 is an outrageous example of one government placing political dogma ahead of the best interests of the world".

BARRIE CASSIDY: No, I'm asking whether you read it and what you say to that accusation that -

JOE HOCKEY: No.

BARRIE CASSIDY: ... your Government placed political dogma ahead of the best interests of the world.

JOE HOCKEY: That's not right.

BARRIE CASSIDY: Do you think you should have said more about climate change in the run-up to the conference?

JOE HOCKEY: Barrie, let me tell you, this is an economic forum. This is about millions and millions of jobs. This is about getting people out of poverty. This is about how we are going to ensure that our children have jobs in the future and, of course, having clean environment, having better quality environment is part of it, but we cannot afford to deal with climate change if governments are in recession or if countries are facing huge structural challenges.

BARRIE CASSIDY: Sure, but do you accept climate change potentially is one of the biggest impediments to growth?

JOE HOCKEY: No. No, I don't. Absolutely not .

BARRIE CASSIDY: Why not?

JOE HOCKEY: I mean you just look at China. China is going to continue to increase emissions Barrie until 2030. It's going to continue increasing emissions to 2030. Australia is doing the same amount of work on climate change as the United States over a 30-year period.

So, frankly, what we are focused on is growth and jobs and we want people to have the jobs that gives them the chance to have an income, that gives them a chance in many parts of the world to lift themselves out of poverty.

What we're doing today is making decisions that are going to give people food and electricity and clean water, but also give them hope that tomorrow's going to be better than today.

BARRIE CASSIDY: Given what the United States and China has done, will you need now to do more in the run-up to 2025? You will need to give commitments out to 2025. That means a new approach and more money?

JOE HOCKEY: Well, Barrie, I will leave that to the Environment Minister and, of course, the Foreign Minister is going to Lima in two weeks' time for a UN conference to talk about that. There is a Paris conference next year that's going to talk about that.

At the moment, right here in Australia, we have 85 per cent of the world economy. We're focused on the mainstream economic issues Barrie. That's what we're actually focused on, the here and now of delivering growth, building Australia as a hub for global infrastructure. Australia to become the global hub of infrastructure, which is a huge potential announcement out of today. These are the things that make a huge difference to everyday Australians.

BARRIE CASSIDY: I will leave the environment issue to the Environment Minister, but one question on the domestic front and on the budget. In the first three months of this year, this financial year, net debt increased from around $202 billion to $221 billion. As recently as April the Prime Minister said Australia is dealing with a debt and deficit disaster. If it was a debt and deficit disaster in April, what is it now?

JOE HOCKEY: I'll tell you what, it is exactly that. The problem we have is the trajectory is still rising. Labor is standing in the way of $28 billion of savings. And our revenue is falling as a government because iron ore prices are coming off, so if you've got falling revenue, you have to reduce your expenditure. The problem is Labor is blocking that. They're even blocking their own announcements, Barrie. This is extraordinary. They are blocking their own announcements on savings and they're giving tax breaks to the 20 largest companies in Australia and they're saying that's fine even though when they were in government, they wanted to get rid of it. We are doing our best, Barrie, and the only way we can start to get the budget back to surplus is to reduce expenditure, particularly that we've got falling revenue.

BARRIE CASSIDY: You have a better appreciation now of how falling revenue has an impact on the budget, because that is something that you disputed when Labor was in office and that forecasts can be wrong.

JOE HOCKEY: Well yes and the problem was that Labor kept being overly ambitious in their forecast. When we came in we were more realistic, in fact they said we were way too conservative. Thank God I was careful, thank God I was prudent in relation to the forecasts because iron ore prices have fallen much further than anyone predicted. They have fallen 30 per cent in the last five months, and that has a big impact on the budget.

Having said that, we will fix the problem because we have a plan and our plan is to get the budget back to surplus. Something Labor was never able to do.

BARRIE CASSIDY: And it's true that iron ore prices have gone down, but there are swings and roundabouts in this. The dollar was at about $1.10 when Labor was in office, it is now down to 87 cents, that's got to help?

BARRIE CASSIDY: Well, it can help. There are swings and roundabouts in that, but let me tell you iron ore prices which actually deliver the income come in at far higher under Labor.